AMD Struggles as Palantir and Arm Holdings Surge Ahead

AMD faces challenges as its stock plummets 21% in 2024, unlike Palantir's 301% growth. The semiconductor market sees shifts toward AI, heavily influencing future stock valuations.

Date: 18-01-2025

AI Rating: 4

Advanced Micro Devices (AMD) has seen significant declines, with a 21% drop in stock price in 2024, a stark contrast to the 24% gain in the broader PHLX Semiconductor Sector index. This trend of underperformance has been evident over the past five years as well, where AMD gained 141% compared to the 170% improvement in the semiconductor sector index.

The report identifies reasons for AMD's struggles, including weakness in the personal computer market, diminished demand for gaming consoles, and its delayed entry into the lucrative artificial intelligence (AI) sector, allowing competitors like Nvidia to flourish. These factors have resulted in AMD lagging behind key competitors, which could impact its stock performance further in the future.

On the other hand, Palantir Technologies (PLTR) has seen incredible stock growth, with a 301% increase over the past year. The report discusses how Palantir's customer base has surged, contributing to expected revenue growth of 26% for 2024, driven partly by its artificial intelligence capabilities and improving margins due to increased adoption of its AI Platform.

Furthermore, Palantir's net dollar retention rate has improved significantly, indicating that existing customers are expanding their use of its services, which can positively affect its profitability and future revenue growth.

Arm Holdings has also been highlighted as a strong competitor with a 100% increase in stock value over the past year. Arm is well-positioned in key markets, including smartphones and the Internet of Things, and is gaining traction in cloud computing. The report estimates Arm's earnings per share (EPS) are expected to grow 31% next fiscal year as their licensing business thrives.

Given the positive trends for Palantir and Arm, AMD's lagging growth and market challenges may lead to a decline in its market cap, especially as Palantir and Arm potentially overtake AMD's valuation in the coming years.

Stocks: NASDAQ:AMD NASDAQ:PLTR NASDAQ:ARM